Porter’s Five Forces
Threat of New Entrants
We would rate this threat as low. This is an industry that requires a very high capital investment. It also
takes !me to build up rela!onships such as the ones that Costco has already nurtured. The company has
been in business many years and is not about to let a new compe!tor come in and take away its key
suppliers.
The Bargaining Power of Buyers
This could also be classified as a low threat as there are really no buyers that Costco relies so heavily that
they can demand prices lower than those o&ered. This is an industry that does not have a lot very large
buyers. A vast majority of the shoppers in this industry are consumers no di&erent from you and I. We do
not have the bargaining power to demand lower prices.
The Bargaining Power of Suppliers
Here again we %nd ourselves looking at an industry that is not at the mercy of its suppliers. Many of the
products that are carried by large retailers have many subs!tu!ons. For example, there are televisions or
cereals or shampoos made by so many suppliers that the industry is not compelled to give in to demands
